Trader Talk 12/22/2011
Brian Shannon - AlphaTrends
Barbara Cohen - ShadowTraders
Geof Smith - DTITrader
How did you get your start in the markets?
Barbara – I started about 12 years ago as a computer programmer
Brian – I got started right out of college as a retail stock broker. I was attracted to trading and technical analysis.
Geof – I was about 17 or 18 years old and my father didn’t want us to go through the school of hard knocks like he did, so he sent me to an investor boot camp for about a week. I spent a week with Tom Busby. I couldn’t go out on the weekends unless I had read the wall street journal. My father wrote me a check for $10,000, and I’m still trading that same $10K today.
What is a setup that you look for each trading day?
Barbara – We want to know if it’s going to be a light trading day or a heavy trading day. What set-up based on what we know the market is going to do, what are we really looking for. On days when the market is bearish, we know that it's going to be a downer day, we look for counter-trends.
Geof – I would say that one of the main set ups is around 6:30 am central time for a silver trade. I go back out and check the news and see how the metals market is going to trend based on the strengths and weaknesses of the European market.
Brian – You need to come prepared for long or short exposure. I don’t read too much into the news. I’m generally aware of headline, but I want to take notice of stock setups. What I’m looking for is the individual stocks.
Have you ever over traded and if so how did you overcome it?
Brian – not so much this year. My trading volume is way down compared to last year. Over trading is something we all fall into. I tend to notice when I do it, then I’ll put some limits on myself. I only allow myself to do X number of trades and really try to slow it down and keep track.
Geof – You try to dig out of a hole and keep digging and keep digging to reduce the loss. I really overcame my overtrading with time. I set limits for myself and sometimes will wait till the next trading session, whether it be afternoon or the next morning to trade. Time has slowed me down the best.
Barbara – The way we get around it is by telling our students that you should always trade at exactly the same time every single day. The cause of a lot of over trading is because you’re always trading with different people at different times of the day. As a group, at specific times of the day, you know the trend. You’ll get accustomed to the way they trade.
What is your opinion about what is in store for the market in 2012?
Geof – depending on the market, I think that we’re in for a lot more of what we’ve been seeing. The news isn’t bad enough to take us down, but it's not good enough to take us up. The market has a tendency to sell off around March, and with it being an election year, the market will be a little upset. There should be more caution the next year.
Barbara – You can’t talk about the markets in 2012 unless you talk about politics. We’ve all seen the in-sighting going on within the markets. What it will mean for 2012, is that because the two parties will spend so much money, the action will be good for the market. There will be more jobs, they’ll be gone on the third of November, but that’s after the election, so it doesn’t matter. More people will be making money so more people will be spending money. I don’t think either party will cause a really bad down trend. Expect an up-trend in the beginning of the year, flat mid-year, then a rally around the end of the year.
Brian – I struggle with that each year. I look at the SPY to measure the SP 500. We’re down .50 in the SPY, but we’ve been up 9% and now we’re down 13%. These overnight gaps are really making things difficult this year. You really have to be trading the European session. I think we’ll see volatility. I’m looking for a cleaner trading market.
Brian: What timeframes work best in a volatile market?
The current market, when you have these gaps, I’ll trade some indexes. I like to use the triple ETFs. What’s really been best for me in day trading is to look at what the direction of the five day moving average is, and also on a one minute chart, I’m looking at support and what tries to come back through it. I think you have to be aware of those shorter term levels and the pivots have been magnets for price movements. We might have gone a penny or two through the SPY charts today.
Contact Brian: @alphatrends on Twitter
Barbara: What advice would you give someone struggling in today’s markets?
Get some education. A lot of people think that they can open a brokerage account and start trading without understanding the market or the rules of the market. That’s why educators like DTI and Shadow Traders exist. You wouldn’t buy some lumber and expect to know how to build a house. Don’t put money on the table until you understand how to trade.
Contact Barbara: Come over to shadowtraders.com and sign up for a Tuesday webinar.
Geof: As a gold trader, what are your current thoughts following the recent drop in gold prices?
I think gold and silver are a little over bought. We’re a few hundred bucks above the open, we had a few weeks this year that silver dropped 27%. We had some pretty substantial pull downs and have not recovered. I’d like to see if gold can get to 1720 or 1730. I think that the biggest thing is that if we have a strong economy, inflation comes in and with a weaker economy, deflation will come in. It's hard to tell what will happen in the future just because of the uncertainty that we have now. If it weren’t for the tsunami in Japan and the upheaval in Egypt, the SP would probably be around 1400 by now. I think in the next 6 months or so, it's going to be very choppy.
Contact Geof: www.dtitrader.com 3 days for $3 for live trading with DTI
To view the recording of Trader Talk, please click here: Trading Education
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